I use this blog to gather information and thoughts about invention and innovation, the subjects I've been teaching at Stanford University Continuing Studies Program since 2005.
The current course is Principles of Invention and Innovation (Summer '17).
Our book "Scalable Innovation" is now available on Amazon http://www.amazon.com/Scalable-Innovation-Inventors-Entrepreneurs-Professionals/dp/1466590971/

Monday, August 06, 2012

(BN) Nokia Fighting for AT&T Shelf Space Shows Hurdle for Next Lumia

When Angelo Amato, a former Nokia Oyj (NOK1V) customer, went to get a new smartphone at an AT&T Inc. (T) store in Manhattan last week, he never got a chance to even see the Finnish company's models. The shop didn't have any of Nokia's nine-month-old Lumia line on display and the salesman didn't mention it as an option.

"I would consider a Nokia again, but I've never heard of Lumia," said Amato, 41, who runs Dominick's Café in New York and owns an Android phone made by HTC Corp. (2498)

Amato's experience underscores what Nokia's smartphone chief Jo Harlow says is the former market leader's biggest challenge as it tries to resurrect the business and reverse market share losses to Apple Inc. (AAPL)'s iPhone and devices running Google Inc. (GOOG)'s Android operating system. Last quarter, Nokia sold 600,000 handsets in North America, little changed from the previous period even after introducing the flagship Lumia 900 in April at AT&T. Apple sold 5.9 million iPhones in the U.S. in the quarter, according to Strategy Analytics.

Stephen Elop, the former Microsoft Corp. (MSFT) executive who was brought in two years ago to revive Espoo, Finland-based Nokia, is now betting a wave of advertising spending by Microsoft to push the new Windows 8 software will help accelerate the momentum for Lumia.

Nokia World

Nokia plans to announce Windows Phone 8-based handsets as early as next month at its Nokia World event -- ahead of an expected Sept. 12 unveiling of the next version of the iPhone -- and have them for sale before the year-end holiday shopping season, said a person with knowledge of the matter, asking not to be identified because the plan isn't public.

Officials at Nokia declined to comment on the timing of its next Windows Phone handsets.

"To come back, they either need to surf on a Microsoft success in mobile or become cool again -- two complicated challenges," said Arnaud Bauduin, a Paris-based fund manager at Ofi Asset Management, which oversees $61 billion in assets. Bauduin said he sold the last of his Nokia holding in April.

To boost Lumia sales, Nokia has gathered hundreds of volunteering U.S. employees -- from such diverse departments as finance to human resources -- to work alongside salesmen at carriers. That group, dubbed the Nokia Army, has allowed the company to educate consumers as well as retail sales staff, with the aim that they are willing to mention Lumia as an alternative, Harlow said.

Comeback Attempt

"The challenges are really around how fast can we build that awareness," Harlow said in an interview in New York last week. "I don't want to characterize the retail sales associates as if it's an insurmountable challenge, because it's not, it's just work, day-to-day work to ensure they have all the information they need, that they have used the device, that they are able to tell the whole story."

Nokia has identified the U.S. as a market where it has to win over users to gain steam for its global comeback bid. With carriers such as AT&T and Verizon Wireless selling almost all smartphones circulating in the U.S., the level of support from their sales teams will help determine Nokia's success.

Nokia, whose U.S. market share peaked at 32 percent in 2001, accounted for about 2 percent of smartphone purchases in the second quarter, according to Strategy Analytics. IPhone and Android combined made up about 90 percent.

Lumia Shipments

"The moment of truth is that retail sales associate," Elop said in an interview in New York.

Nokia has lost more than 90 percent of its market value since Apple introduced the iPhone in 2007 -- a debut that left Nokia's devices looking outdated and sent its sales plunging. The company has posted five straight quarterly losses and has its debt ranked junk at the three largest rating companies.

While Lumia sales have been dwarfed by competitors, early shipments have exceeded some analysts' estimates. Nokia sold 4 million of the devices globally in the second quarter, doubling from the first quarter and beating the 3.8 million analysts on average projected.

Since the company's July 19 earnings report, Nokia's shares have climbed 43 percent from a near 18-year low. They rose 3.3 percent to 1.96 euros in Helsinki trading on Aug. 3.

Harlow said Nokia's 2011 decision to move to Microsoft's operating system from its home-grown software was an attempt to differentiate from rivals. The company is also offering training to carriers' salespeople and providing them with sample Lumia phones to help them convince customers its functions are superior to the iPhone's and Android's.

System Revamp

Microsoft's operating system revamp is a key catalyst to enticing consumers, Harlow said. Winning over technology reviewers in the U.S and in the U.K. is critical to turning perception and winning back salesmen whose job is to guide shoppers as they buy their next phone.

"We have to capitalize on those consumers who are looking for something different and we have to keep Windows Phones in front of consumers every quarter with new products, new features, new variants," Harlow said.

AT&T salespeople are aware that the Lumia is an "important device" in the carrier's lineup, said Mark Siegel, a spokesman for the Dallas-based company. AT&T is pleased with its sales of Lumia, he said.

In addition to AT&T, the second-biggest U.S. mobile carrier, Nokia has harnessed T-Mobile USA, the No. 4, to carry the Lumia. It will need more operator partners, such as Verizon Wireless, to expand its reach, said Alex Spektor, an analyst at Strategy Analytics in Boston. Verizon Wireless, the No. 1, sold 5.9 million smartphones in the latest quarter alone, including 2.7 million iPhones and 2.9 million Android devices.

'Hang On'

One thing helping Nokia is the $219.1 billion smartphone market, which keeps expanding. Even as growth slowed to the lowest in almost three years, global smartphone shipments jumped 32 percent to 146 million units in the second quarter, according to Strategy Analytics.

"What's key for Nokia is to not give up too early," Spektor said. "Most are eager to buy an iPhone or an Android, but this is a long-term play for Nokia. They just have to hang on."